Chipotle Heats Up, but Takes a Dive

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

A day after the market slumped on the Fed's decision to take the second step in its stimulus taper, stocks rallied today on strong earnings and GDP numbers. The Dow Jones Industrial Average finished up 110 points, or 0.7%, while the S&P 500 and Nasdaq jumped 1.1% and 1.7%, respectively, as a huge beat by Facebook sent social media stocks soaring. The Commerce Dept. released its first of three estimates on fourth-quarter GDP today, saying the nation's economy grew at an annual rate of 3.2%, better than estimates of 3%. That figure was down from 4.1% in the fourth quarter, but still better than the 1.9% rate for the year. Personal consumption expenditures seemed to drive the strong figure. In other economic reports of the day, initial unemployment claims remained elevated at 348,000, and pending home sales fell 8.7% in December, well below expectations; but the market seemed to overlook those reports.

After hours, Chipotle Mexican Grill shares were heating up, jumping 13% as the burrito roller delivered another stellar quarterly report. Revenue at the fast-casual star increased 20.7%, to $844.1 million, better than estimates at $826.3 million, as same-store sales improved an impressive 9.3%, which came primarily from an increase in traffic. Earnings per share grew 30%, to $2.53, in line with estimates. Restaurant operating margin improved 100 basis points, and CEO Steve Ells said the quarter "demonstrated our ability to focus on and run great restaurants," saying the restaurant teams "continued to delight our customers." For 2014, the company expects nearly 200 restaurant opening and comparable sales in the low-to-mid single digits, excluding any price increases. Shares hit a record high near $560 on the news as Chipotle's 9.3% comp clip was especially impressive during a holiday season where consumers were thought to be pinching pennies. After a quarter like this, Chipotle looks to be poised for another solid performance in 2014. , meanwhile, was headed in the opposite direction after hours, falling 4.6%, to counteract a 4.9% gain during the regular session. The online juggernaut saw sales increase 20%, to $25.6 billion, below the $26.06 billion analysts had expected. Earnings per share of $0.51 also missed the mark of $0.66, but that was still an improvement from $0.21 a year ago. The company's guidance was not any better as it said it expects sales growth of 13% to 24% for the current quarter, below the analyst consensus at 22.4%, and operating profit around breakeven. Wall Street had been eyeing an EPS of $0.54. Amazon is a unique company, and the mild sell-off indicates that investors seem unfazed by a report that would send many stocks down double digits. After all, this is a company that has proved time and again it's willing to sacrifice short-term profits for long-term market power. And while Amazon may never put up huge profit numbers, as long as sales continue to grow at a brisk pace, the stock is likely to move higher over time.

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Jeremy Bowman owns shares of Chipotle Mexican Grill. The Motley Fool recommends, Chipotle Mexican Grill, and Facebook. The Motley Fool owns shares of, Chipotle Mexican Grill, and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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